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by John Brian Shannon | December 28, 2015
Through no fault of their own, the Alberta government headed by Premier Rachel Notley is facing economic crisis due to the lowest global oil prices in years, and with lower prices ahead it goes without saying that Premier Notley and her new government need to either (a) cut spending or (b) boost government revenue.
If boosting government revenue is chosen, economists know there are only three ways for provincial governments to boost revenues;
- Raise taxation revenue
- Raise non-taxation revenue
- Transfers from the federal government
Let’s forget about putting any more holes in the Alberta economy via increased taxation as the province’s economy is under enough stress since the oil price crash.
Let’s also rule out the return of higher oil prices as oil prices are settling in for a long term run in the $30.-50. per barrel range. Why rule that out?
Simple. Millions of barrels of formerly sanctioned Iranian oil are about to hit the market, hard
For nearly a decade, Iran was sanctioned by Western nations and able to sell only small amounts of oil in the global marketplace. But the sanctions didn’t stop Iran from continuing to develop its oil industry, nor did it stop Iran from buying every spare oil tanker and storing their crude at sea, and in thousands of oil storage tanks on land until sanctions ended.
All of which is about to hit the global oil market.
‘Ready to Ship’ is perhaps an understatement as the sanctions scored a direct hit on the Iranian economy, consequently the country is very motivated to resume normal trade.
And let’s not forget the ‘wellhead price’ of oil in all of this
At the Alberta oil sands, the average extraction price for a barrel of crude oil is $56.20. That’s the average price. At some locations the extraction price can surpass $90./bbl.
In Saudi Arabia, still the world’s largest single oil producer, the wellhead price ranges between $14./bbl and $24./bbl (for #3-4 crude) and they can stand $40./bbl oil prices indefinitely. The Saudi producers don’t care how much the oil speculators are making, as long as the price remains somewhat over $24./bbl, they’re seeing profit.
But in Iran… wait for it… the wellhead price ranges from $1./bbl to $21./bbl and they have the world’s fourth-largest proved oil reserves.
Most Alberta oil may be best termed #4 (sour) on the pH scale, tar sands oil can only be called #4.5 or #4.75 and all Alberta crude oil is so sour that it must be blended with liberal amounts of Saudi #3 (sweet) or West Texas Intermediate before any refinery will accept it.
Much of Iran’s oil is of the #3 (sweet) variety, but unlike the situation in other oil-producing nations where most of the #2 (sweet) crude oil was extracted long ago, Iran ranks a close 2nd to Saudi Arabia in proved reserves of #2 crude oil — a perfect match to blend with Alberta’s sour crude.
Therefore, plenty of sweet and cheap-to-produce Iranian oil is about to arrive on the scene and I wouldn’t be surprised to see oil dipping to $28./bbl for a week or two once Iran’s oil exports begin impacting the market.
With the foregoing in mind, let’s look at three ways to boost the Alberta economy:
1. Alberta can still retain its ranking as an energy superpower in the coming decade of depressed oil prices by adding hundreds of wind turbines to the many wind corridors in the province
The Highway 2 corridor starting at the U.S. border heading north to Edmonton (and perhaps as far north as Athabasca) consists of rolling farmland with excellent wind potential. Any Albertan can tell you about the year-round winds native to that corridor, although they may not refer to it as a ‘wind opportunity’ in the same glowing terms as a wind turbine salesperson might…
Farmers can benefit by allowing wind turbines to be installed on their land.
Each wind turbine requires one acre of land (including service road) which makes that land unavailable for crops, therefore, utilities typically lease the land at $4000. per year/per unit.
Some farmers may allow five, ten, or any number of wind turbines on their property.
And good for them! They lose the ability to grow crops or graze their livestock on a fraction of their land, but unlike cash crop income, the wind tower lease payments are guaranteed regardless of the drought or flood situation.
And that non-weather-dependent annual revenue helps to stabilize farm income.
The typical wind turbine produces 1 MegaWatt(MW) of clean electricity and cost about $1 million apiece, although the newer (and more costly) wind turbines produce 2 MW.
Day or night, wind turbines produce reliable, clean electricity especially when situated in wind corridors and installed atop 100-200 metre towers. (Taller towers get better wind)
By selling GigaWatts(GW) of clean electricity to residents, businesses, industry, and via electricity exports to British Columbia, Saskatchewan, and to the northern United States, Alberta would retain its place as an energy superpower — regardless of the global oil price.
And we must always heed the words of Saudi Oil Minister, Ali Al-Naimi, “The Stone Age didn’t end on account of a lack of stones, nor will the Oil Age end on account of a lack of oil.”
The end of oil is coming. We need to begin planning for it. An energy grid that meets demand with 50% natural gas and 50% renewable energy and is strongly geared towards electricity exports is in our best economic and employment interests. The sooner we begin to walk that path, the farther ahead of other regional economies we’ll be.
Or, Alberta could drop the ball completely and become an energy importer from places like British Columbia, Saskatchewan, and the northern U.S. states. That might be a little too ironic for some Albertans.
A great way to create thousands of good-paying jobs in Alberta, not only installer jobs but wind turbine and tower manufacturing jobs, is by negotiating with wind turbine manufacturers, and separately, wind tower manufacturers, to build assembly plants in Alberta.
If all the stars aligned, the province could become the defacto capital of Canada for wind turbine and wind tower manufacturing.
And the province has the potential to become an important centre for wind power technologies, by providing the proper funding to the Northern Alberta Institute of Technology (NAIT) and the Southern Alberta Institute of Technology (SAIT).
There isn’t a reason good enough to prevent Alberta from installing 1000 wind turbines per year within its provincial boundaries AND selling another 1000 wind turbines and towers per year to other jurisdictions in Canada. That’s just the Canadian market, and quite separate from the true north strong and free there’s a big windy world out there.
More jobs, guaranteed income for farmers, cleaner air via clean electricity generation, a better economy due to massive electricity exports and higher tax revenues… what’s not to like about wind power in Alberta?
2. Natural Gas as a baseload energy fuel
Due to historical factors, such as the historically low cost and low technology required to produce heat and electricity from coal, (and also due to the low price of massively-subsidized nuclear power) natural gas became a sort of ’boutique’ fuel used to produce power at so-called ‘peaking’ power plants.
Whenever the coal or nuclear power plants couldn’t meet peak demand, say during summer afternoons when every air conditioning unit was working at maximum capacity, peaking power plants could quickly ramp-up to meet peak demand.
Natural gas power plants can ramp-up or down in minutes, as opposed to coal-fired power generation or to nuclear powered generation, which can take hours or days to ramp-up or down.
With much lower natural gas prices (below $2.00 on the Henry Hub index as of 12/28/15) a huge window of opportunity exists for non-centralized natural gas-fired power generation to enter the energy market as an equal player instead of as a pinch-hitter.
Due to ever-stricter clean air standards and the concerns surrounding global warming, and the obscene water usage of coal-fired and nuclear power plants, natural gas looks to replace coal and nuclear saving billions of subsidy dollars in the process.
Use a cleaner fuel for a cleaner burn
Modern natural gas-fired power generation releases less than half the amount of CO2 as compared to coal-fired power generation.
And that’s just the story on Carbon Dioxide emissions.
It’s the other emissions that are the real problem with coal-fired power generation; It’s things like airborne mercury and heavy metal vapours, sulfur dioxide, oxides of nitrogen and particulate (smoke, ash, and soot) that are the real nasties.
Then there are the thousands of tons (Alberta only) or millions of tons (globally) of fly ash that must be transported and safely buried annually, far from aquifers.
The good news is that natural gas burns up to 1,000,000 times cleaner than brown coal (lignite) and up to 10,000 times cleaner than the cleanest-burning grade of coal (anthracite).
“Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment.
These costs are external to the coal industry and are thus often considered “externalities.”
We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to one-half of a trillion dollars annually.
Many of these so-called externalities are, moreover, cumulative.
Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of nonfossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive.” — Harvard Medicine | Full Lifecycle of coal
As for matching up with wind power, there isn’t a better partner than natural gas-fired power generation. In perfect harmony, natural gas can ramp-up and ramp-down on a minute-by-minute basis to meet Alberta’s electricity demand and can add capacity to electricity exports.
3. Promote Alberta Tourism in a Massive Way
Until now, provinces like British Columbia, Ontario, and Quebec have dominated the Canadian tourism market. And millions of tourists visit British Columbia without ever knowing about the jewel of a province next-door. That must change in 2016.
BC and Alberta must become partners in attracting tourists by launching complementary tourism campaigns in foreign countries — making it seem to prospective tourists that there are so many reasons to visit Western Canada that they decide to visit both provinces and forego travelling anywhere else.
In what other country can you take a cruise ship to a major cosmopolitan city like Vancouver, golf in the morning, ski in the afternoon, enjoy fine dining at night, then hop onboard a scenic VIA RAIL train to Banff, Alberta?
There you can enjoy ice-skating, snowboarding and cross-country skiing or nature hikes, and of course, more fine dining.
Or stay at a working ‘Dude Ranch’ in Bragg Creek rounding-up cattle and wearing your best cowboy hat.
Each $1.00 spent to boost tourism typically returns a minimum of $6.00 making investments in tourism de rigueur for governments wanting to provide jobs and increase government revenues.
Compared to energy megaprojects which take years to ‘break-even’ investment returns from tourism typically happen within 24 months.
Of the easiest and surefire ways to stimulate the Alberta economy, this is likely it.
Tourism requires a relatively small annual investment, a medium-sized commitment from the government, and features a 6-to-1 payback within two years. Not bad.
Although not as large as other segments of the Alberta economy, tourism pays back quickly and requires only moderate effort on the part of the government.
I hope Premier Notley makes tourism one of the first priorities of her government in 2016 — even as she works out longer-term and higher reward arrangements to secure a better energy future for Alberta.
by John Brian Shannon | November 18, 2015
It’s a fact of international law that military aircraft from one nation entering the airspace of another nation (without permission) is illegal and considered an act of war.
It’s also illegal for aircraft (or ships) from ‘Country A’ to enter ‘Country B’ and kill people there — even if the people they kill are members of a heinous terror organization.
This is a matter of international law. There’s no ambiguity, it’s not up for discussion, and it’s not under debate by legal scholars anywhere. No constitutional lawyers anywhere dispute this part of sovereignty law.
(For the record; Some countries don’t respond militarily to illegal incursions into their air, sea, or land space — while others respond aggressively. It’s the aggrieved nation’s right to respond in any way it deems appropriate)
Two exceptions are allowed under international law
If a country or a coalition of countries, have a mandate from the United Nations (via a UN Security Council or General Assembly resolution) then they may enter and engage hostile combatants under the conditions set within the UN resolution.
The other exception is when the host country has formally requested that a country, or a coalition, intervene inside their borders.
International laws apply equally to every nation. They aren’t like an à la carte dinner menu where you can simply choose which laws you wish to follow
No matter how evil some terror groups are, countries that break international law are just as guilty of breaking laws as those terror groups
If some countries in the West send their fighter-bomber jets into Syria; a) uninvited by the host government, or; b) with no UN mandate to do so — they are just as guilty of breaching international law as ISIS, perhaps moreso — as nation states know full well the responsibilities of international law and they know that they are bound by those laws. Any protestations by government spokespersons are doublespeak.
ISIS is not a country. Having pretensions at being a country, is not the same thing as being a country
ISIS is a terror group, and although bound by the criminal and civil laws of whatever countries they operate in, they’re not a country and are therefore not bound by the same laws that nation states must uphold.
My point is, if we in the West are saying that we’re a great moral force in the world, then we better start acting like it.
Historically, Canada is renown as a nation that abides by the rule of law
In no way should Canada be invading the sovereign airspace of any nation with our fighter aircraft, no matter the pretext.
In fact, our constitutional document refers to ‘Peace, Order and Good government’ as the justification for supporting the idea of a federal government in the first place. So…
Either Canada is a nation that respects international law, or it isn’t
If we abide by international law, then we are setting a good example and we should expect to be treated accordingly by other nations. And if occasion arises when our good example is not reciprocated by other nations, then we can claim full legal recourse with support from other law-abiding nations.
If we don’t abide by international law, but instead rely on the law of the jungle — then we must realize that we will be treated accordingly by the UN, by other institutions and by other nation states.
One way or another, we’ll get what we deserve
Therefore, Prime Minister Justin Trudeau seems on the right side of international law when he indicated that Canada’s CF-18’s would stop flying into Syrian airspace to bomb civilians — only some of whom may be ISIS members.
Until then, Canada continues to break international law by flying into Syrian airspace and bombing civilians
Let’s not forget that ISIS members are civilians who have joined a terror organization — they’re not members of the Syrian Army and Canada isn’t at war with Syria — therefore, we have no legal right to be there regardless of how evil the ISIS entity is. The anger we feel at their horrific terror attacks doesn’t entitle us to become lawbreakers.
We’re supposed to be the country of ‘Peace, Order and Good Government’ – not a country of ‘Anger, Revenge and International Scofflaws’
The sooner Canada returns to conformance with international law the better; For the reputation of this country, for the example that this country sets to the world, and for this country’s future security.
Canada’s best way forward for dealing with ISIS, is to operate within Iraq, a country which has formally asked for our assistance
Canada can contribute to operations on the ground and in the air in the fight against ISIS within Iraq. We’ve been asked to be there, and we should therefore, show up and contribute our best effort.
If Canada, claims that it is part of a great and moral fight in the world, then let us start by being moral
And in this case, that means getting out of Syrian air, sea, and land space, ASAP — and fulfilling our mandate to be enablers of Peace, Order and Good Government by assisting the government and people of Iraq to our best ability.
- Scope of Canada’s military training mission in Iraq could expand (The Globe and Mail)
- Paris attacks: UN passes resolution urging action against Isis (Financial Times) [But not Article 7. – Ed.]